The NAB battles the XM / Sirius merger

The NAB battles the XM / Sirius merger

Summary: Engadget caught this ad funded by the National Association of Broadcasters (NAB) which lampooned the proposed merger of XM and Sirius. Unfortunately, this got them into hot water with MasterCard, whose well-known "Priceless" campaign was the source of the NAB's knock-off, so that particular campaign was pulled.

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TOPICS: Banking
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Engadget caught this ad funded by the National Association of Broadcasters (NAB) which lampooned the proposed merger of XM and Sirius. Unfortunately, this got them into hot water with MasterCard, whose well-known "Priceless" campaign was the source of the NAB's knock-off, so that particular campaign was pulled.

It did bring to my attention, however, that the NAB was putting lobbying dollars into blocking the XM / Sirius merger, which if you think about it, is rather odd. The NAB has nothing to do with satellite radio. From the NAB web site:

The National Association of Broadcasters is a trade association that advocates on behalf of more than 8,300 free, local radio and television stations and also broadcast networks before Congress, the Federal Communications Commission and the Courts.

Why should a consortium of companies that compete with satellite radio stir up antitrust fears? If we were to distill antitrust to its fundamentals, it's supposed to prevent companies from acquiring enough market control to charge artificially high prices. Should the newly consolidated satellite radio broadcasting company opt for higher prices, however, wouldn't that be an extremely good thing for the NAB, given that it would make their mostly free offerings that much more competitive?

In other words, the NAB should welcome the consolidation if it truly would lead to the abuses predicted by antitrust. The fact that they don't leads me to believe that the real fear is that a combined XM / Sirius would pose better competition than before to NAB-affiliated companies. That's hardly a reason to oppose the XM / Sirius merger, and means the NAB is fighting the merger on selfish anti-competitive grounds.

As noted before, a combined XM / Sirius would have loads of competition, the most important being terrestrial radio broadcasters. There is no reason to block the merger unless people forget the point of antitrust and create ridiculously narrow defintions of the marketplace that ignore XM / Sirius' real competition.

NAB "concerns" seem a part of that organization's ongoing battle with satellite radio, as befits a lobbying group created to defend the interests of its members (parallels to the CCIA exist here). In a position paper on the subject of satellite radio, the NAB complains about satellite radio "breaking the rules" by broadcasting localized content. This is a bit like trying to torpedo a murder case based on procedural grounds, and I don't know why government should agree to do something that would protect NAB members from competition with satellite broadcasters. Rules have a purpose, and they aren't supposed to be anti-consumer. Worse for the NAB, however, that position paper explains in a single paragraph why government regulators shouldn't lose any sleep over the merger of XM and Sirius:

From a competitive standpoint, hometown radio broadcasters have little to fear from satellite radio companies. With 96% of Americans listening to free, local radio once a week and three-quarters tuning in daily – and satellite occupying less than 1% of the market – hometown radio continues to be the dominant source for compelling audio entertainment. That said, satellite radio companies should not be allowed to flaunt the terms of their FCC licenses.

Beware the consolidation of satellite radio, even though it is an inconsequential part of the market. Guess the NAB isn't paid for its consistency.

Topic: Banking

John Carroll

About John Carroll

John Carroll has delivered his opinion on ZDNet since the last millennium. Since May 2008, he is no longer a Microsoft employee. He is currently working at a unified messaging-related startup.

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5 comments
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  • Local broadcasting is a thicket.

    For example, AT&T had a problem when the company attempted to gain approval from state legislatures without meeting a mandate for carrying local television stations. As I understand it, the company didn't want to take the time. And have to suffer negotiations with companies which know that their products must be purchased.

    For me, the local station requirement gives monopoly power to the owner of those stations.

    Satellite radio would be acceptable to the NAB if it were in some way possible to insist that the available stations include local ones. But, as with the internet, that's a difficult requirement to police.

    Maybe that organization of local broadcasters hopes that the unmerged companies will each go broke, removing significant competition. And maybe newer competition will have wires of some sort, which can be used to impose town by town demands.
    Anton Philidor
    • Good point

      [i]Maybe that organization of local broadcasters hopes that the unmerged companies will each go broke, removing significant competition. And maybe newer competition will have wires of some sort, which can be used to impose town by town demands.[/i]

      As you noted, that's what incumbent cable providers have used to block telco incursion into their monopolized markets.

      Satellite is opposed by NAB members as it is harder to use the web of regulations incumbents have used to secure monopolized markets to keep out new competitors. Satellite signals blanket the entire country, and it seems odd to require that they not be allowed to offer local programming.
      John Carroll
      • National vs local

        The NAB statement complains about using local inserts about weather and traffic, for instance. That leaves the local markets for the NAB members.

        From this, I concluded that if satellite radio were to broadcast local news from the stations and pay them, that this would be acceptable. That's equivalent to the local stations requirement for television.

        So not being allowed to offer local programming doesn't seem to me "odd", but a consistent way to use additional technological choices as a way to increase revenues from existing products.
        Anton Philidor
  • Local? NAB?

    Last I looked Clear Channel pretty much had broadcast radio sewn up. The NAB has already gotten the FCC to throw out all the local and max ownership rules in broadcasting. Pot meet kettle. Kettle meet pot.
    slopoke
    • Another good point

      I'm sure Clear Channel is one of the biggest contributors to the NAB these days, and that occurred to me as I was writing the blog (local channels, WHAT local channels). It create more sympathy-inducing noises if you can paint a scene of grandma and grandpa running their small-town radio station where jug bands get a chance to earn a bit of cash.

      In other words, this is BIG COMPANIES trying to put hurdles in the way of a competitor that is about to get bigger and have more resources to aim at competing with them. That, however, is the way antitrust usually works.
      John Carroll